Accounting adjustments and timing
Quarterly updates are not the same as your final taxable figures. HMRC says you do not need to make accounting or tax adjustments before sending a quarterly update. After your fourth quarterly update, review the year as a whole and make any year-end adjustments before you submit your tax return.
What belongs where
Report category totals from your digital records during the year. No accounting or tax adjustments are required before each update.
What usually belongs at year-end
Year-end is where running records become tax figures. That may include:
- Allowances that reduce taxable business or property income
- Tax adjustments for expenses you cannot claim
- Accounting adjustments such as prepayments or accruals
- Adjustments because of your accounting period
- Capital allowances for qualifying assets
Most changes are made at category level — updating the annual total for an income or expense category rather than editing each transaction.
Cash basis and traditional accounting
Cash basis is the default for self-employment and property income. If you use cash basis, you do not usually need adjustments for accruals or prepayments. Under traditional accounting (accruals), your software should let you make those year-end adjustments before you submit.
Example: an annual insurance bill paid in January can be split across the months it relates to under traditional accounting, rather than all sitting in one month.
Allowances and claims that need care
Capital allowances are claimed before you submit your tax return. Software may let you record them during the year, but HMRC will not process the claim until the return is submitted.
If you claim the Trading Income Allowance, Rent a Room relief, or Property Income Allowance, you cannot also claim business expenses for that same income source. Expenses already included in quarterly updates may need to be removed before the allowance claim at year-end.
Non-aligned accounting periods
If your accounting period does not line up with the tax year, you may need extra adjustments so return figures match the correct tax-year basis. If you change a quarterly figure after making year-end adjustments, you may need to redo the adjustment step.
Plain-English rule of thumb
Use quarterly updates to keep HMRC up to date during the year. Use year-end adjustments to make figures tax-correct. If something is about timing, tax treatment, allowances, or which expenses are claimable, it usually belongs in the year-end review.
See also: Quarterly updates, How the final declaration works, Reporting additional income.
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